The nation’s two largest gaming industry trade associations are calling on Congress to use its legislative authority to shut down what they describe as a fast-growing and unregulated form of sports betting emerging from federally registered prediction markets.
The American Gaming Association and the Indian Gaming Association wrote a joint letter urging federal lawmakers to take “timely congressional action” to ban sporting event contracts offered by certain prediction market platforms that fall under the jurisdiction of the US Commodity Futures Trading Commission. The Washington-based lobby groups argue that the sports event contracts offered by prediction market platforms are “indistinguishable from legal sports betting,” and because of the CFTC’s inaction, undermine state regulation and tribal sovereignty.
The growth of prediction market platforms “contradicts existing federal laws and regulations intended to protect consumers and the integrity of our nation’s financial markets,” the AGA and IGA said in the Jan. 12 letter.
Gambling Lobby says “event contracts” are really unregulated sports betting, gambling
The trade groups are pushing for Congress to include clarifying language in upcoming cryptocurrency market structure legislation. Many prediction markets use crypto-settlement or tokenized contracts, and lawmakers have expressed interest in defining how these products should be regulated.
Earlier this week, a group of US senators unveiled a draft bill outlining a regulatory framework for cryptocurrency, which is likely to change as it moves through the legislative process.
“We are confident that Congress’s consideration of cryptocurrency market structure legislation provides an important, bipartisan opportunity to prevent sports betting and casino gambling under the guise of ‘event contracts,'” the AGA/IGA letter states.
Traditional prediction markets were designed to allow users to trade based on expectations about elections or economic indicators.
In the past year, however, some CFTC-affiliated platforms have introduced contracts that, according to some casino and sportsbook operators, more closely resemble sports betting than financial derivatives. These products have been rolled out through a self-certification process that allows them to launch unless the CFTC formally intervenes.
Under the Commodity Exchange Act, the CFTC may not approve event contracts linked to terrorism, war, murder, or gambling.
Litigation over the scope of the agency’s authority has left the issue unresolved, and CFTC Chairman Michael Selig told lawmakers during his confirmation hearing that the agency does not plan to block those contracts while legal disputes continue. He also said the CFTC would follow any direction given by Congress.
Fight for prediction markets already in Nevada
The legal battle over these markets is already playing out in Nevada, which remains the most influential sports betting jurisdiction in the country.
In early 2025, state regulators discovered that New York-based KalshiEx LLC was selling prediction contracts tied to sporting events to Nevada residents. Kalshi’s platform allows users to buy and sell yes-or-no contracts on topics ranging from economic indicators to weather results to pop culture events.
But its sports contracts quickly came under scrutiny. The Nevada Attorney General concluded that Kalshi’s sports contracts amounted to a form of unlicensed sports betting.
In March, Kalshi sued individual members of the Nevada Gaming Control Board and the Nevada Gaming Commission. The Nevada Resort Association joined the case as a defendant because the sale of the prediction market’s sporting event contracts directly affected casino gaming.
A federal judge later dissolved a preliminary injunction that had allowed Kalshi to continue offering sports-related contracts in the state. Competing platforms, including Robinhood and Crypto.com, agreed to stop sporting event contracts in Nevada. Kalshi did not.
The company continues to operate in Nevada while it appeals the ruling to the Ninth Circuit Court of Appeals. The case is being closely watched nationally because it could set a legal precedent for where prediction markets end and sports betting begins.
The gaming industry is at odds with predicted markets
Many commercial casinos and tribal governments want to preserve the state-based regulatory model that has governed America’s gaming for decades. However, digital-first operators are looking for room to innovate in adjacent areas that overlap with predictive markets.
The joint letter signals that the most influential trade groups support strengthening the traditional model even as some former members explore alternatives.
Recently, several major digital sportsbook operators, including FanDuel and DraftKings, have pulled out of the AGA or reduced their involvement as they introduced their own prediction market-style products.
AGA and IGA say the issue goes beyond business strategies. They argue that prediction markets operate without standard consumer protections, independent privacy oversight or responsible gaming frameworks. They also note that states and tribes lose tax revenue that would otherwise fund public services.
Some platforms have introduced contracts linked to geopolitical events and military conflicts. According to the gaming groups, these categories would never be allowed under state or tribal law.
Contact David Danzis at ddanzis@ theplayerlounge.com or 702-383-0378. Follow @AC2Vegas_Danzis on X.
